Income protection vs critical illness cover: which protects you better?
Both protect you if illness stops you working, but they pay out in completely different ways. One pays a regular monthly income for as long as you cannot work. The other pays a single lump sum on diagnosis of a defined condition. Understanding the difference is the key to choosing well.
How income protection works
Income protection pays a regular, usually monthly, benefit if you are unable to work due to illness or injury. It typically pays a percentage of your income (often around 60% of gross), continues until you can return to work, the policy term ends, or you reach a set age, and can cover a very wide range of conditions, not just a defined list. It is built around the question: what if I cannot work for a long time?
How critical illness cover works
Critical illness cover pays a one-off lump sum if you are diagnosed with one of a specific list of serious conditions and survive. It pays regardless of whether you can still work, and the payout is a single amount rather than an ongoing income. It is built around the question: what if I am hit with a specific serious illness?
The crucial distinction
Critical illness can pay a lump sum when a listed condition meets the policy definition and claim terms. Income protection can pay a regular benefit when inability to work meets its definition, after the deferred period and subject to limits and exclusions. A diagnosis or inability to work does not by itself establish a payable claim. Compare both products against your circumstances, existing benefits and the actual policy terms.
Which should you prioritise?
For most people whose biggest financial risk is being unable to earn, income protection is the higher-leverage product, and it is often the most under-bought. Critical illness adds a valuable lump sum on top for major diagnoses. Many people layer the two: income protection as the foundation, critical illness for the lump-sum events. An adviser sizes both against your actual income, outgoings, and any employer cover you already have.
Not sure which is right for you?
That is exactly what we are here for. A quick conversation with an adviser will give you a clear answer based on your situation.
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